The Directors of Savills plc ("Savills" or the "Company"), the international property advisors, announce today that agreement has been reached to acquire an initial 50% share in each of Korean Asset Advisors (KAA) and BHP Korea (BHPK) for a total initial consideration of 18.2bn Korean Won (approx £10.7m). The acquisitions are part of Savills’ strategy of growing its Asian business further and taking advantage of this attractive, high growth market.
The investment is being made through Savills’ wholly owned subsidiary, Savills Asia Pacific Limited HK (“Savills Asia”). Savills Asia will have an unconditional option to acquire an additional 5% of each business in one year’s time based on the post-tax profit of the businesses. The agreement also outlines conditions for both put and call options on the remaining shares in both businesses. The put and call option will first be exercisable in three year’s time and the consideration will be based on the average of the profits after tax over the three years ending 31 December 2006, 2007 and 2008. The transaction is subject to Korean regulatory approval.
The pre-tax profit forecast for the combined businesses for the calendar year 2005 is approximately 4.2bn Korean Won (approx £2.7m).
KAA is a private Korean company, located in Seoul and specialising in Property Management and Asset Management. Created and owned by Mr Hokyu Lee, it acts for institutional clients primarily servicing grade A office properties, with over 1m square meters (10m square feet) under management. In addition, the business offers office and retail leasing services, together with project management advice.
BHPK is an investment advisory, valuation and tenant representative business and offers research consultancy services, undertaking work for clients of KAA as well as others.
Mr Hokyu Lee will remain as Chief Executive of KAA and will lead the business through the next stage of development. He will also become a member of Savills Asia’s Executive Committee.
Savills Asia has had a strong presence in the Asia Pacific region since Savills acquired First Pacific Davies in 1997. Savills now has over 80 offices in 20 countries including China, Hong Kong, Australia, Japan and Singapore. Today’s investments follow other recent corporate developments for Savills Asia including the acquisition of Hampden Real Estate in Singapore and the opening of a Savills’ office in Tokyo in December 2004.
Aubrey Adams, Group Chief Executive of Savills, commented:
“This investment is a clear demonstration that Savills is committed to growing its Asian business. By adding these two businesses to our offering we will be able to expand into key geographical locations where we see opportunities to offer a value added service to our investment and owner/occupier clients. We see Asia as a key market for Savills and look forward to growing our Asian business further.”
Robert McKellar, Chief Executive of Savills Asia Pacific said:
“I am delighted that we have been able to make this investment into the growing market for real estate services in Korea. Korea is the third largest economy in Asia and the eleventh largest in the world, and is a key tier one real estate market for Savills. Korea is increasingly seen as a major institutional market for real estate investment and recent changes in government regulations will increase the opportunities for foreign asset management in the country. In addition to the provision of real estate services in Korea, Savills expects to benefit from the influence that many Korean clients based in Seoul will have for real estate services abroad. The investment by Savills into KAA and BHPK will enable Savills to become the dominant real estate provider in Korea. The Company’s ambition is to become the leading real estate service provider in Asia Pacific.”